Ken Fisher's High-Dividend Stock Picks

Over the past few years, the world financial markets have been hit by one crisis after another. In order to stimulate the economy, central banks all over the world have been applying all kinds of expansionary monetary policies. The Fed, for example, has committed to ultra-low interest rates for another two years.

We believe the average inflation rate will be more than 2% over the next 10 years, and 10-year Treasuries won’t be able to beat the inflation. Instead, we think high-dividend stocks are better investments as they can protect investors from inflationary risks and will likely outperform long-term Treasuries over the next 10 years.

In this article, we are going to focus on the dividend stocks that billionaire fund manager Ken Fisher is bullish about. Fisher’s stock picks outperformed the market in 11 times out of the past 14 years. He beat the market by 24 percentage points in 2009 and 5 percentage points in 2010. Below we compiled a list of Fisher’s high-dividend US stock picks. All companies have at least $10 billion market cap and dividend yield of higher than 4%, and Fisher Asset Management reported to own at least $1 million worth of these stocks at the end of the third quarter.

At the end of September, Fisher Asset Management had $389 million invested in Pfizer Inc. The stock has a dividend yield of 4.09% and returned 23.03% since the end of the third quarter, versus 11.02% for SPY in the same period. PFE has a market cap of $166B and a P/E ratio of 16.95. Besides Fisher, Ric Dillon is also bullish about PFE. At the end of September, Dillon’s Diamond Hill Capital invested $177 million in this stock.

Another mega-cap dividend stock that Fisher is bullish about is Merck & Co Inc. At the end of the third quarter, Fisher Asset Management disclosed owning $10 million of MRK. Since then, MRK returned 15.85%, beating the market by more than 4 percentage points. MRK has a dividend yield of 4.49%. Ric Dillon is bullish about MRK as well. At the end of the third quarter, his Diamond Hill Capital had $155 million invested in this stock.

Southern Copper Corp has the highest dividend yield among the stocks listed above. It has a dividend yield of 8.22% and returned 22.45% so far in the fourth quarter, doubling the return of the market in the same period. As of September 30, Fisher Asset Management had $18.3 million invested in SCCO. Billionaire Jim Simons also had $12.6 million invested in SCCO. John Burbank’s Passport Capital boosted its stakes in SCCO by 180% to $27.5 million over the third quarter.

Other high-dividend stocks that Fisher likes include Verizon Communications Inc, Eli Lilly & Co, Exelon Corp, and PPL Corp. We like high dividend stocks. These stocks pay fat dividends, which provide better returns than long-term Treasury bonds. Additionally, good dividend stocks can also deliver decent capital gains to investors. We think one of the best ways to pick strong dividend stocks is to focus on those stocks that are loved by successful fund managers like Ken Fisher.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.